I made my first slide show using VMS from high resolution digital pictures. The results are very disappointing ... teh slide show is very grainy (low resolution). Do I have a setting wrong or is this normal?
Well, don't forget this is video editing software, baldguy. No matter what resolution the photos are that you put in, you're still only going to get video resolution. That's 720 x 480 in the NTSC system. On your TV that looks fine but on a computer monitor (which is probably set to at least 1024 x 768, you're looking at three or more times that resolution, so it's going to look under-rezzed (i.e., grainy and jagged).
Chances are it will work just fine on a TV.
And, before you ask, no, you can't increase the resolution of the video in this program. That's HD-TV no consumer editing program for the PC that I know of is capable of working with it yet.